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La Financière Nationale Inc.

Conservatory Measures

What is a conservatory measure?

The Superintendent of Bankruptcy puts in place conservatory measures when a bankruptcy or insolvency estate needs protection. It might be in cases of Licensed Insolvency Trustee (LIT) malfeasance or if serious wrongdoing on the part of a LIT puts estate files at risk. Conservatory measures may also be put in place if a LIT becomes ill or dies without a valid succession agreement. Finally, conservatory measures may be put in place if a LIT, for whatever reason, has allowed the administration of his or her practice to become substandard.

Canada

In the matter of:
Pfeiffer & Pfeiffer Inc.Sydney H. Pfeiffer

Instructions for Conservatory Measures
(section 14.03 of the Bankruptcy and Insolvency Act)

Whereas the Bankruptcy and Insolvency Act provides the Superintendent with the general power to supervise the administration of all estates and matters to which the Act applies;

Whereas as of April 3rd, 2002, Mr.Robert Massé,Senior Evaluation Officer, contacted Sydney H. Pfeiffer, Trustee, in order to make arrangements with him for the purpose of beginning a general audit of the trustee firm Pfeiffer & Pfeiffer Inc., which audit in fact, began on May 1st, 2002;

Whereas during the course of this audit and despite the trustee's lack of collaboration with the Senior Evaluation Officer, Mr.Massé identified numerous deficiencies in the trustee's practice, specifically that estate funds are not invested in authorized investment products, the interest is not distributed and/or paid to estate accounts in accordance with the Superintendent's Directives, fees have been withdrawn without proper authorization, the accounting system as used by the trustee does not meet the minimal standards imposed by the Superintendent's Directives, thereby not permitting an adequate evaluation of accounting data or of transactions performed within each estate, and consequently, making it impossible to complete a proper assessment of the trustee's administration of the estates;

Whereas, when questioned about these various deficiencies, the trustee did not provide satisfactory explanations, he provided copies of bank documents which appeared to be incomplete and he refused to produce the originals of these documents, also, he did not produce other documents pertaining to accounting and banking matters as requested by the Senior Evaluation Officer, Mr.Massé;

Whereas the delays, the lack of cooperation by the trustee Sydney H. Pfeiffer, and his refusal to produce documents requested by the Senior Evaluation Officer, Mr.Massé prevented Mr.Massé from continuing his audit of the trustee firm Pfeiffer & Pfeiffer Inc. causing him to leave the trustee's office on June 19, 2002;

WhereasMr.MasséRaymond Villemure, Assistant Superintendent Audit, required the trustee Sydney H. Pfeiffer, by letter dated June 21, 2002 to produce various banking and accounting documents on or before June 26, 2002;

Whereas the trustee did not produce the requested documents;

Whereas the Superintendent of Bankruptcy may and must, for the protection of an estate, exercise the powers referred to in subsection 14.03(1) of the Act in the circumstances stipulated in subsection 14.03(2) of the Act;

Whereas the Superintendent of Bankruptcy has delegated to the Deputy Superintendent (Policy, Programs and Standards, now Programs, Standards and Regulatory Affairs) in accordance with subsection 14.01(2) of the Act, in certain situations mentioned in subsection 14.03(2), his powers as specified at subsection 14.03 (1) of the Act, copies of which delegation are attached along with copies of subsections 14.01(2) and 14.03(1) to (4) of the Act;

In accordance with paragraph 14.03(1)c) of the Bankruptcy and Insolvency Act;

1) to make no debit and/or payment and/or transfer on funds credited to the estates of bankruptcies and proposals administered by Pfeiffer & Pfeiffer Inc. without the cheques, notes, certificates of deposit and or transfers being co-signed by Laurent Lachance or Louis Nolet or Bernadette Blain along with Sydney H. Pfeiffer;

2) not to pay bills of exchange, cheques, bank drafts, certificates of deposit or others, emitted before the reception of these instructions which would be presented for payment after the receipt of these instructions without these cheques, bills of exchange or drafts being co-signed by one of the persons identified in paragraph 1) above along with Sydney H. Pfeiffer;

These instructions take effect immediately and will stay in place until further notice or until a decision is rendered under section 14.01 of the Act;

In accordance with subsection 14.03(3) of the Act, these instructions bind their addressee, who must comply with them;

In accordance with subsection 14.03(4) of the Act, a person who complies with the present instructions is not liable for any act done by the person only to comply with them.